October 3, 2016
By Mark Terry, BioSpace.com Breaking News Staff
It’s been an off year for biotech stocks so far. That can be either a reason to worry, or a reason to look around for undervalued biotech stocks that are likely to have strong growth in the future. The Motley Fool had three of its analysts suggest biotech stocks that are worth considering.
Todd Campbell presented Acadia Pharmaceuticals . The company just launched its sole drug, Nuplazid (pimavansrin) to treat Parkinson’s psychosis. With a third-quarter earnings report coming up, investors will get a chance to see how it’s doing.
Campbell writes, “If third quarter results show Nuplazid sales are ramping up quickly, then Acadia’s stock could enjoy tailwinds in Q4, but an even bigger market-moving event may be the company’s upcoming release of data from a trial evaluating Nuplazid in Alzheimer’s disease psychosis.”
The company has also been floated as a potential acquisition target for Biogen , which is all-in on the Alzheimer’s market these days. But Biogen’s drugs, if they are successful in Alzheimer’s, won’t hit the market for a few years, so analysts have thought it might invest in a company that has something selling in that space now. Acadia would be a good choice.
Acadia is currently trading for $30.98.
Brian Feroldi is optimistic about Ophthotech . Headquartered in New York and Princeton, New Jersey, Ophthotech focuses on therapies to treat diseases on the back of the eye, in particular, age-related macular degeneration (AMD). Its lead product, Fovista anti-PDGF therapy, is currently in a Phase III trial in combination with anti-VEGF monotherapy to treat newly diagnosed wet AMD patients compared to current monotherapy. Results are expected by the end of the year.
Feroldi writes, “In a Phase IIb trial, Ophthotech showed that Fovista in combination with Lucentis led to a gain of 10.6 letters from baseline on a standardized vision test. That was substantially ahead of the 6.5-letter gain that patients who only used Lucentis experienced. Those results were so good that Novartis decided to ink a $1 billion deal to secure the international rights to Fovista, which speaks volumes about the drug’s long-term sales potential.”
Ophthotech is currently trading for $44.93.
Sean Williams suggested Ligand Pharmaceuticals . The company had a bad September, when its stock price dropped 12 percent on September 27 after Amgen released data from its Phase III of its multiple myeloma drug Kyprolis against Takeda Pharmaceuticals ’ Velcame. Essentially the study showed identical progression-free survival, with some slight favorability toward Velcade over Kyprolis.
Ligand has tiered royalties on Kyprolis, which comes to about 2.5 percent of net sales in 2016. So investors freaked out a bit, concerned that Ligand’s near-term growth might slow if Kyprolis sales dipped as a result of the trial data.
Williams writes, “The good news for long-term investors is that Ligand’s portfolio is much larger than just Kyprolis. More than 150 drugs are currently being developed using its technology, and it’s working with more than 90 different partners and licensees. Assuming it nets an average royalty between 3.5 percent and 4.5 percent of net sales, and even a relatively small number of those experimental therapies get approved, Ligand could double its sales and profits in the blink of an eye.”
A quick look shows just how busy the company is. On August 15 it announced positive results from two Phase I trials of LGD-5972 for type 2 diabetes. On September 7, it announced positive topline results from the Phase II DUET study of sparsentan to treat focal segmental glomerulosclerosis (FGS), a rare kidney disorder. On September 13, the company started a Phase II trial of LGD-6972 to treat type 2 diabetes.
On September 16, Ligand signed a license agreement with TeneoBio, so TeneoBio can use the OmniFlic technology from the OmniAb platform to identify fully human bispecific antibodies. And on September 22, Ligand licensed the rights to four programs to Seelos Therapeutics, including its aplindore program to treat various central nervous system disorders, a CRTH2 antagonist program for respiratory disorders, a Captisol-enabled acetaminophen program for pain and fever management, and an H3 receptor antagonist program for narcolepsy.
Ligand is currently trading for $101.47.
